Dependency Test - Rush

[TAX]

Client, mfj, has claimed daughter as dependent.

This child was 25 as of 01/01/2008
Her Income = No w-2, Interest = $1, Div = 826, Capital gain = 2622
So total income = $3,449

(1) Can she be claimed as dependent becauser her Gross income is more than $3400

(2) Do you include capital gain in Gross income for dependency income test?

[veritas]

is the child

disabled?........

[TAX]

No. Fulltime student

[veritas]

Too old for qualifying child

Too much income for qualifying relative.

[Zee]

Yes?

I'm not an expert on this, but used the Tax Tools flowcharts. I thought she was disabled, and might qualify. She is not a qualifyingchild. Capital gains are included in gross income. As such, her income exceeded the $3400 threshold by $49. What a shame.

According to the Tax Tools flowchart, the daughter would qualify as a dependent if her gross income was less than $3400, assuming her parent's paid more than half of her support. Or, the daughter would be a qualifying child if she was a full-time student under the age of 24 at 12/31/07, and would qualify as a dependent.

[JoshinNC]

Are we talking about 2007 exemption or 2008?

If 2007 she is qualifying child as fulltime student and 24 or younger at year end (note b-day of 1/1/08).

[veritas]

Full Time Student

"must be under age 24 at the end of 2007 and a full time student for any part of five calendar months during 2007".

From page 3-15 of TTB.

[veritas]

I guess the government

figures your kid can get a degree in 5 years. Start college 19 (or 18) and finish at 23.